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A Short Course On Investing
Our
site is dedicated to promoting sound fundamental investing practices.
Fundamental investing, buying sound businesses at reasonable prices
and holding them, is proven to being the most reliable, safest,
and best performing strategy of all.
Great
investors such as Ben Graham, Warren Buffett and Peter Lynch,
to name a few, have led the way and proven this strategy with
real world superior results. Their philosophies and ideas are
worth listening to, and will lead to long-term investing success.
Their
words of wisdom should be reviewed and contemplated. Therefore,
we offer this section of our website as a short course in investing
prowess. We suggest you visit it often. Read their guidance,
think about each quote, evaluate its logic and soundness and learn
to be a successful investor. Most importantly, follow their advice
with discipline and total commitment. The rewards will be profound.
We
have divided these quotes into four important sections, click
on any of the button below to go directly to that section.
Sound
Principles of Investing
How to Think
About Stock Prices
How to Think
About the Stock Market
Invest Like
A Business Owner
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Sound
Principles of Investing
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"Rule
No. 1: Never lose money. Rule No. 2: Never forget
Rule No. 1." Warren Buffett
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| "To
win you must not lose." Ben Graham |
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"To
invest successfully over a lifetime does not require
a stratospheric IQ, unusual business insights or inside
information. What's needed is a sound intellectual
framework for making decisions and the ability to
keep emotions from corroding that framework." Warren
Buffett
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| "There
are no 'Good News' Newspapers" Anonymous |
| "It
is the underlying rate of technological change that
determines the growth rate." Charles C. Carnevale
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| "The
greatest weapon against fear is knowledge, which ultimately
leads to wise and prudent judgment." Charles
C. Carnevale, EDMP, Inc. |
| "Risk
comes from not knowing what you are doing." Warren
Buffett |
| "In
investments, there's no such thing as a called strike.
You can stand there at the plate and the pitcher can
throw a ball right down the middle, and if it's General
Motors at 47 and you don't know enough to decide on
General Motors at 47, you let it go right on by and
no one's going to call a strike. The only way you can
have a strike is to swing and miss." Warren
Buffett |
| "One
would think that anyone whose profession is investing
would make Warren a Serious Case study and Analyze and
Dissect his philosophy." Mary Buffett & David
Clark 'Buffettology' |
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| On
Warren Buffett - "He is a man who has taken the investment
and business philosophies of some of the greatest minds
that have addressed the subjects of commerce and capital
and synthesized an absolutely new approach based on
these old lessons. His approach is in many ways contrary
to conventional wall street wisdom." Mary Buffett
& David Clark 'Buffettology' |
| "Concept
of the concentrated portfolio." Mary Buffett &
David Clark 'Buffettology' |
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How
to Think About Stock Prices
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| "Earnings
determine market price. Always have, always will."
Charles C. Carnevale, EDMP, Inc. |
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| "Berkshire
buys when the lemmings are heading the other way. Most
people get interested in stocks when everyone else is.
You can't buy what is popular and do well." Warren
Buffett |
| "Through
extensive research and analysis, we have discovered
and confidently determined that thoroughly understanding
and focusing on the clear correlation and functional
relationship between earnings and market price leads
to superior investment results with a considerable reduction
in risk." Charles C. Carnevale, EDMP, Inc. |
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| "Earnings,
Earnings, Earnings" Peter Lynch - 'One Up On Wall
Street' |
| "You
can see the importance of earnings on any chart that
has an earnings line running alongside the stock price.
On chart after chart the two lines will move in tandem,
or if the stock price strays away from the earnings
line, sooner or later it will come back to the earnings."
Peter Lynch - 'One Up On Wall Street' |
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| "A
quick way to tell if a stock is overpriced is to compare
the price line to the earnings line. If you bought familiar
growth companies ... when the stock price fell well
below the earnings line, and sold them when the stock
price rose dramatically above it, the chances are you'd
do pretty well." Peter Lynch - 'One Up On Wall Street'
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| "The
P/E ratio of any company that's fairly priced will equal
its growth rate. I'm talking about growth rate of earnings
here." Peter Lynch - 'One Up On Wall Street' |
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| "Inactivity
strikes us as Intelligent behavior." Warren Buffett,
1996 Berkshire Hathaway Annual Report |
| "For
some reason, people take their cues from price action
rather than from values. What doesn't work is when you
start doing things that you don't understand or because
they worked last week for somebody else. The dumbest
reason in the world to buy a stock is because it's going
up." Warren Buffett |
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| "Just
because you buy a stock and it goes up does not mean
you are right. Just because you buy a stock and it goes
down does not mean you are wrong." Peter Lynch 'One
Up On Wall Street' |
| "What
makes stocks valuable in the long run isn't the market.
It's the profitability of the shares in the companies
you own. As corporate profits increase, corporations
become more valuable and sooner or later, their shares
will sell for a higher price." Peter Lynch, Worth
Magazine, September 1995 |
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| "In
the long run, it's EARNINGS that determine market price
and dividend income." Charles C. Carnevale,
EDMP, Inc. |
| "Great
investment opportunities come around when excellent companies are
surrounded by unusual circumstances that cause the stock to be misappraised.
It's only when the tide goes out that you learn who's been swimming
naked." Warren Buffett |
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| "Unrealized
Market Depreciation occurs when the market price of
a publicly traded security declines. Permanent impairment
of Capital occurs when the Fundamental values of a business
are dissipated with the consequent long-term adverse
consequences." Martin J. Whitman, Chairman of the
Board, Third Avenue Value Fund |
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"Only
those who will be sellers of equities in the near
future should be happy at seeing stocks rise. Prospective
purchasers should much prefer sinking prices." Mary
Buffett & David Clark 'Buffettology'
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How
to Think About the Stock Market
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| "In times of crisis, money moves from
weak hands to strong hands." Wall Street maxim |
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| "I
don't believe in predicting markets. I believe in buying
great businesses - especially companies that are undervalued,
and/or under-appreciated" Peter Lynch 'One Up On
Wall Street' |
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| "If
we see anything that relates to what's going to happen
in Congress, we don't even read it. We just don't think
it's helpful to have a view on these matters."
Warren Buffett |
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"The
portfolio of great businesses must act and be positioned
exactly as the averages (S&P 500, DJIA, etc.).
In other words, the portfolio must not be traded except
under the extreme circumstances." Charles
C. Carnevale, EDMP, Inc.
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| "The
reality of running with the herd is that your ultimate
destination is the slaughter house." Charles
C. Carnevale |
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"I'd
be a bum on the street with a tin cup if the markets
were always efficient." Warren Buffett
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| "Investing
in a market where people believe in efficiency is like
playing bridge with someone who has been told it doesn't
do any good to look at the cards." Warren Buffett |
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"The
stock market ought to be irrelevant. If I could convince
you of this one thing, I'd feel this book has done
it's job. And if you don't believe me, believe Warren
Buffett. "As far as I'm concerned," Buffett has written,
"the stock market doesn't exist. It is only there
as a reference to see if anybody is offering to do
anything foolish." Peter Lynch 'One Up On Wall
Street'
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| "The
fact that people will be full of greed, fear or folly
is predictable. The sequence is not predictable."
Warren Buffett |
| "The
Stock market is always and never rational." Ben Graham |
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| "I
never attempt to make money on the stock market. I buy
on the assumption that they could close the market the
next day and not reopen it for five years."
Warren Buffett |
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"(Partner)
Charlie (Munger) and I never have an opinion on the
market because it wouldn't be any good and it might
interfere with the opinions we have that are good."
Warren Buffett
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| "The
market is there only as a reference point to see if
anybody is offering to do anything foolish. When we
invest in stocks, we invest in businesses." Warren
Buffett |
| "If
we find a company we like, the level of the market will
not really impact our decisions. We will decide company
by company. We spend essentially no time thinking about
macroeconomic factors. In other words, if somebody handed
us a prediction by the most revered intellectual on
the subject, with figures for unemployment or interest
rates, or whatever it might be for the next two years,
we would not pay any attention to it. We simply try
to focus on businesses that we think we understand and
where we like the price and management." Warren
Buffett |
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| "Every
investor should be prepared financially and psychologically
for the possibility of poor short-term results. For
example, in the 1973-74 decline, the investor would
have lost money on paper, but if he held on and stuck
with the approach, he would have recouped in 1975-76
and gotten an average 15% return for the five year period."
Ben Graham |
| "In
the short run, the market is a voting machine, reflecting
a voter registration test that requires only money,
not intelligence or emotional stability. But in the
long run, the market is a weighing machine." Ben
Graham quoted by Warren Buffett in the 1993 Berkshire
Hathaway Annual Report. |
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| "At
EDMP we realize that attempting to forecast markets
or stock prices in the short-run is an exercise in futility.
Short-term market movements are driven and dominated
by emotion and not rational thought. At any given moment
in time, the powerful emotions of fear or greed can
and will overshadow reason. However, in the longer-run,
dialectic thinking prevails." Charles C. Carnevale,
EDMP, Inc. |
| "EDMP
believes that the stock market has nothing to do with investing. Whether
"bull" or "bear," the market always contains overpriced, fairly priced,
and under-priced companies." Charles C. Carnevale, EDMP, Inc. |
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| "Don't
try to buy at the bottom and sell at the top. This can't
be done except by liars." Bernard Baruch |
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"Last
week is the time you should have bought or sold, depending
on which you didn't do." Leonard Louis Levinson,
Communicator Magazine
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Invest
Like a Business Owner
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| "Judge
your holdings by how well their businesses are performing
rather than what a "schizophrenic" Wall Street
may be saying. If fundamentals are good and the price
falls, hold or buy more as appropriate. If the price
rises to unjustifiable valuations, sell and replace
to protect against risk regardless of fundamentals."
Charles C. Carnevale, EDMP, Inc. |
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| "Ben
Graham said you should look at stocks as small pieces
of the business. Look at (market) fluctuations as your
friend rather than your enemy - profit from folly rather
than participate in it. He said the three most important
words of investing: "margin of safety." I
think those ideas, 100 years from now, will still be
regarded as the three cornerstones of sound investing."
Warren Buffett |
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"Having
a business perspective on investing is more about
discipline than philosophy and once understood it
demands absolute devotion. Stray from it, and you
will wander the financial lunar landscape, forever,
dancing to the folly called forth by fear & greed.
Adhere to its wisdom, and the foolishness of others
becomes the field in which you reap your harvest."
Mary Buffett & David Clark 'Buffettology'
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| "It
is a discipline that tends to tell the investor as much
if not more what not to buy as what to buy." Mary
Buffett & David Clark 'Buffettology' |
| "Our
strategy is based on the simple logic and reality that
great businesses are by definition better than average."
Charles C. Carnevale, EDMP, Inc. |
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| "Keynes
essentially said don't try and figure out what the market
is doing. Figure out a business you understand, and
concentrate." Warren Buffett |
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"We
will continue to ignore political and economic forecasts
which are an expensive distraction for many investors
and businessmen. Thirty years ago, no one could have
foreseen the huge expansion of the Vietnam War, wage
and price controls, two oil shocks, the resignation
of a president, the dissolution of the Soviet Union,
a one day drop in the Dow of 508 points, or treasury
bill yields fluctuating between 2.8% and 17.4%. But
surprise - none of these blockbuster events made even
the slightest dent in Ben Graham's investment principles.
Nor did they render unsound the negotiated purchases
of fine businesses at sensible prices. Imagine the
cost to us, if we had let a fear of unknowns cause
us to defer or alter the deployment of capital. Indeed,
we have usually made our best purchases when apprehensions
about some macro event were at a peak. Fear is the
foe of the faddist, but the friend of the fundamentalist."
Warren Buffett, Berkshire Hathaway 1994 Annual
Report
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| "If
you aren't willing to own a stock for ten years don't
even think about owning it for ten minutes" Warren
Buffett, 1996 Berkshire Hathaway Annual Report |
| "Investment
students need only two well taught courses: - How to
Value a Business, and - How to think about market prices"
Warren Buffett, 1996 Berkshire Hathaway Annual Report |
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| "There
is no formula to figure (intrinsic value) out. You have
to know the business (whose stock you are considering
buying). Valuing a business is part art and part science."
Warren Buffett |
| "I
remain impressed with how much easier it is for us,
and everybody else who has modicum of training, to determine
what a business is worth, and what the dynamics of the
business might be, compared with estimating the prices
at which a non-arbitrage security will sell in near-term
markets." Martin J. Whitman, Chairman of the Board,
Third Avenue Value Fund |
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| "When
managers want to get across the facts of the business
to you, it can be done within the rules of accounting.
Unfortunately, when they want to play games, at least
in some industries, it can also be done within the rules
of accounting. If you can't recognize the differences
you shouldn't be in the equity picking business."
Warren Buffett |
| "It
must logically follow that if earnings determine market
price, then forecasting earnings is the key to successful
investing." Charles C. Carnevale, EDMP, Inc. |
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| "Investment
must be rational; if you don't understand it, don't
do it." Warren Buffett |
| "If
a permanent impairment of capital seems likely - sell.
If there is to be unrealized market depreciation average
down." Martin J. Whitman, Chairman of the Board,
Third Avenue Value Fund |
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| "Draw
a circle around the businesses you understand and then
eliminate those that fail to qualify on the basis of
value, good management and limited exposure to hard
times." Warren Buffett |
| "Whenever
I read about some company undertaking a cost-cutting
program, I know it's not a company that really knows
what costs are all about. Spurts don't work in this
area. The really good manager does not wake up in the
morning and say, "This is the day I'm going to
cut costs," any more than he wakes up and decides
to practice breathing." Warren Buffett |
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| "You
should invest in a business that even a fool can run,
because someday a fool will." Warren Buffett |
| "Investment
is most intelligent when it is most businesslike" Mary
Buffett & David Clark 'Buffettology' |
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| "Warren
took the idea that the only business worth investing
in is one with excellent business economics and the
theory that the time to sell an excellent business is
never." Mary Buffett & David Clark 'Buffettology'
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| "The
theory of investment value - A business's worth is related
to what it will earn in the future." Mary Buffett
& David Clark 'Buffettology' |
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| "To
buy excellent businesses at a price that makes business
sense... this offers you the highest predictable annual
compounding rate of return possible with the least amount
of risk." Mary Buffett & David Clark 'Buffettology' |
| "The
Price you pay determines your rate of return." Mary
Buffett & David Clark 'Buffettology' |
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| "Warren's
Solution to all this Bear/Bull market twaddle is to
totally ignore it. He can do this because he buys into
a business on the basis of price (Value). Where the
market is on any given day doesn't really matter to
him." Mary Buffett & David Clark 'Buffettology' |
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EDMP, Inc.